Luna Innovations Inc. (NASDAQ: LUNA)(G*)
* Financial status indicator is deficient and bankrupt.
Luna Innovations Inc. (LUNA) is engaged in the research, development and commercialization of technologies in the areas of test & measurement, sensing, and instrumentation products and health care products. The Company is organized into two main groups: Products Division and Technology Development Division. The Company’s principal products and product candidates are organized into two classes: instrumentation and test and measurement products, and healthcare products, both of which are managed by its Products Division. The Products Division is supported by Luna Innovations’ Technology Development Division, which provides applied research services to its government and corporate customers. On July 17, 2009, Luna Innovations Inc. and its affiliate filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke.
The Company was incorporated in 1990 and is headquartered in Roanoke, Virginia.
|
Share Statistics (14-Dec-09) |
|
FY 2007 |
FY 2008 |
% Chg |
Q3 2008 |
Q3 2009 |
% Chg |
|
| Symbol |
LUNA |
Revenue, $Mn |
33.68M |
36.90M |
8.7% |
10.70M |
8.87M |
17.1% |
| Current price |
$2.31 |
Gross marg. |
36.6% |
38.1% |
3.9% |
40.2% |
n/a |
n/a |
| 52wk Range: |
$0.26-3.25 |
Oper. margin |
-24.5% |
-19.8% |
19.2% |
-4.1% |
n/a |
n/a |
| Avg Vol (3m): |
479,865 |
Net margin |
-23.5% |
-17.1% |
27.2% |
-4.4% |
n/a |
n/a |
| Market Cap. |
26.0M |
|
|
|
|
|
|
|
| Dil. Shares Outst. |
11.3M |
EPS, $ |
-0.77 |
-0.57 |
26.0% |
-0.04 |
-0.18 |
350.0% |
Source: Reuters.com, SEC Filings.
Financial Summary
Third Quarter Financial Highlights
- Total revenues for the third quarter of 2009 decreased by $1.8 million to $8.9 compared to $10.7 million during the third quarter of 2008.
Product and license revenues decreased $1.2 million to approximately $2.3 million in the third quarter of 2009 compared to $3.5 million in the third quarter of 2008.
Technology Development Division revenues decreased by $0.7 million to approximately $6.5 million compared to $7.2 million in the third quarter of 2008. Backlog was approximately $25.7 million at September 30, 2009, and at September 30, 2008.
Gross profit for the third quarter of 2009 decreased to $3.5 million from $4.3 million for the corresponding period of 2008.
Operating expenses remained approximately flat at $5.4 million in the third quarter. Legal fees and reorganization expenses were approximately $1.6 million during the third quarter of 2009.
Net loss per share for the third quarter of 2009 was $0.18 per share, an increase from a loss per share of $0.04 for the third quarter of 2008. Net loss in 2008 included a one-time benefit of $0.7 million in net gain recognized on a litigation settlement.
Cash and cash equivalents decreased to $5.7 million at September 30, 2009, compared to $12.1 million at the end of last quarter. During the quarter, the company repaid the outstanding balance on its bank debt facility in the amount of $4.3 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) excluding the costs for reorganization and the Hansen litigation are $0.8 million compared to $0.6 million in the third quarter of 2008 and $1.3 million year to date compared to $0.2 million for the first nine months of 2008.
Third Quarter Business Highlights
- LUNA booked approximately $3.4 million in technology development contracts in the third quarter, including an award from the National Institutes of Health’s National Institute of Environmental Health Sciences to examine the effects of Luna’s fullerene derivatives on the allergic response.
The Company also launched a new product in the Optical Vector Analyzer™ platform, the OVA 5000, an instrument providing complete, rapid, single-scan measurement of all parameters of optical networks in real-time.
| Financial Strength (14-Dec-2009) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 0.39 | 1.90 | 1.72 | 0.92 |
| Current Ratio (MRQ) | 0.45 | 2.04 | 2.03 | 1.09 |
| Long-Term Debt to Equity (MRQ) | – | 34.10 | 18.23 | 124.46 |
| Total Debt to Equity (MRQ) | – | 53.93 | 29.00 | 185.43 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
No chart available.
Source: www.ft.com
No consensus estimate analysis available.
Source: http://www.reuters.com/finance/stocks/estimates?symbol=LUNA.W
Investment Highlights
LUNA announced on December 11, 2009, that it has executed a Settlement Agreement with Hansen Medical Inc. (Nasdaq: HNSN) resolving the outstanding litigation between the companies. Additionally, LUNA has filed with the bankruptcy court its First Amended Joint Plan of Reorganization (the “Plan”) and other bankruptcy documents to implement the Settlement Agreement and allow the Company to emerge from Chapter 11 reorganization as quickly as possible. Under the Plan, the Company proposes to pay 100% of its due and payable valid claims and Luna stockholders will retain their shares of Luna’s Common Stock. The Settlement Agreement and the transactions contemplated by it, as well as the Plan and other bankruptcy documents, are subject to court approval and entry of an applicable confirmation order, as well as other conditions.
The Settlement Agreement contemplates that Luna and Hansen will enter into a number of additional documents, which will include:
- A development and supply agreement between Luna and Hansen for purposes of integrating Luna’s fiber optic shape sensing technology into Hansen’s medical robotic instruments.
A license of Luna’s shape sensing technology to Hansen in the fields of medical robotics and medical non-robotics.
A $5 million secured promissory note payable over four years from Luna to Hansen, whose security interest may be subordinated in favor of a working capital credit facility.
Issuance of shares of Luna Common Stock to Hansen in the amount equal to 9.9% of the total outstanding shares and a warrant for Hansen to maintain that equity position for three years.
A mutual release of outstanding claims in litigation between Hansen and Luna.
LUNA’s shape sensing and localization technology can provide real-time position measurements to help surgeons navigate through the body. The system consists of software, instrumentation and disposable optical sensing fiber. LUNA’s technology, originally developed at NASA, is designed to provide the user with an accurate, direct and continuous measurement of device location with no adverse effect from line of sight limitations and without introducing electrical signals or radiation into the body.
Source: http://www.lunainnovations.com/index.htm
Technical Analysis
Source: http://stockcharts.com
LUNA is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.
The MACD for LUNA currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.
Comparative Analysis
|
Company Name |
Ticker |
Price per |
Mrkt. Cap. |
P/E |
P/S |
||
|
Dec-14-2009 |
symbol |
Share, $ |
$ Mn |
2009 |
2010 |
2009 |
2010 |
|
|
|
|
|
|
|
|
|
| Green Dynamics |
GD |
70.45 |
27.14B |
11.40 |
n/a |
0.83 |
n/a |
| Lockheed Martin Corp. |
LMT |
77.98 |
29.45B |
10.18 |
n/a |
0.66 |
n/a |
| SAIC Inc. |
SAI |
19.02 |
7.52B |
15.30 |
n/a |
0.68 |
n/a |
| Science & Tech. Median |
|
|
73.97B |
12.29 |
n/a |
0.72 |
n/a |
| LUNA Innovations Inc. |
LUNA |
2.31 |
26.0M |
n/a |
n/a |
0.50 |
n/a |
Source: Thomson Financial
Insider Trading Activity
|
NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months |
||
|
Shares |
Transaction |
|
| Purchases |
n/a |
0 |
| Sales |
n/a |
0 |
| Net Shares Purchased (Sold) |
n/a |
0 |
| Total Insider Shares Held |
5.05M |
n/a |
| % Net Shares Purchased (Sold) |
0.0% |
n/a |
|
Net Institutional Purchases — Prior Qtr to Latest Qtr |
|
|
Shares |
|
| Net Shares Purchased (Sold) |
34,376 |
| % Change in Institutional Shares Held |
4.6% |
Source: Yahoo Finance
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